Before 1982 there was no oil futures, OTC or swaps. Oil industry was controlled back then by the Opec and the 7 US sisters, a True monopoly of the Black Gold. Yet, Oil price went straight to the $101 per barrel (inflation adjusted) in late 70's and the country got a severe disruption of destillates.
When The US deregulate the Oil markets, The Crude Oil went straight down to the $9 dollar per barrel in the mid 90's.
During the 00's Greenspan and the government intervention create a artificial worldwide free credit monster, That artificial prosperity and the manipulation of the US dollar helps to create the international conditions of more demand of energy. Because you need Crude Oil to Built everything in this world. You Need crude oil if you want to produce a Lipstick, Glass, Auto, Roads, To fly a plane, to build weapons, ethanol, You need oil for expor-imports cargoes etc etc etc. Once that credit bubble explodes, the crude oil went from 147 to 32 dollar per Barrel in less than 10 months. Yet, despite the $147 record in 2008, there was no supply disruption of Crude Destillates like in the 1970's.
Just look at the Indian and Chines futures mistakes with overregulation of the futures markets. In today's china only 31 Chinese companies are allowed to trade in the international futures market and none of these are airlines, As a result, Chinese airlines can only conduct their fuel hedging through derivatives offered by some investment banks in the OTC markets. Chinese Airlines has been suffering more than their western counterparts.
What wee need is more players in the field, less regulation, the elimination of most Oil ETFs, we need to ban the investment banks direct participation in this industry and we need more incentives to build new technologies. And washington should stop their irresponsible manipulation of the USD
Quote from ByLoSellHi:
Why not just let a huge monopoly (in addition to OPEC, which can't operate in the U.S. by law) buy up all the oil distribution rights and oil supply sold into U.S. terminals, and then control the price of an essential resource, upon which the U.S. economy literally runs, and institute a pricing scheme that guarantees that oil will be priced at $500 per barrel, and gasoline and diesel at $15 to $20 per gallon?
Why shouldn't they be allowed to do this? If they are buying the oil, they should be able to do whatever they want with it. Put it on a spaceship and send it to the moon, who cares. They are gobbling up supply by doing this, so of course prices should rise. How is this different than anyone else who purchases oil and in turn consumes it?
